Shares in Gulf Keystone Petroleum (GKP) were trading down 4 percent on Wednesday despite an announcement that the company had secured a two-week extension of its standstill agreement with its bondholders:
Further to the Company’s announcement of 20 May 2016, Gulf Keystone announces today that, as discussions with the Ad Hoc Committee of holders of Notes and Bonds are continuing and as the previous Standstill Agreement was due to expire on 31 May 2016, the Ad Hoc Committee has entered into a new standstill agreement with the Company until 13 June 2016.
The signatories to the new Standstill Agreement are substantially the same as to the prior standstill. They hold a significant proportion (but less than 75% by principal amount) of each of the Company’s Notes and Bonds.
Whilst the Standstill Agreement remains in effect, the Company does not intend to make the April 2016 Coupon Payments. The continuing failure to make those payments constitutes an Event of Default under the Bonds and Notes, respectively.
At a time when an Event of Default subsists the holders of not less than one-quarter of the principal amount of the Notes or the Bonds, as the case may be, then outstanding may request the relevant Trustee to declare the principal amount of the Notes or the Bonds, as the case may be, immediately due and payable.
The signatories to the Standstill Agreement will agree not to vote in favour of any resolution of the Noteholders or Bondholders to instruct the relevant Trustee to take such a step.
A further announcement will be made in due course.
(Sources: GKP, Yahoo!)